Non-traded real estate investment trusts (“REITs”), such as KBS REIT I (“KBS I”), unlike exchange traded REITs, are complex and risky investment vehicles that do not trade on a national securities exchange such as the NYSE or NASDAQ. Unfortunately, retail investors are often uninformed by their broker or money manager of the illiquid nature of non-traded REITs, meaning that investors who wish to sell their shares can only do so through a direct redemption with the issuer or through a fragmented and illiquid secondary market.
Apartment Building
KBS I launched through its initial public offering (“IPO”) in early 2006 for issuance of up to 200 million shares. Through its IPO at $10 per share, KBS I raised $1.7 billion prior to closing in May 2008. The company’s portfolio includes nearly 200 properties, in addition to participation in various real estate loan receivables.
KBS I has gradually written down its estimated share value over the years, but no liquidity event has yet provided a public market that would establish the true value of KBS I shares. One secondary market that provides a limited platform for investors in non-traded REITs, Central Trade & Transfer, has recently listed shares of KBS I with a bid-ask spread of $1.90 – $1.80 a share, suggesting that investors in KBS I may have suffered principal losses of as much as 80% on their initial investments of $10.00 a share.
If you have invested in KBS I, or another non-traded REIT, and you have suffered losses in connection with your investment (or are currently unable to exit your illiquid investment position without incurring considerable losses), you may be able to recover your losses in FINRA arbitration. To find out more about your legal rights and options, contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation.